All the foreign currencies futures but the Canadian dollar closed up on Monday, as expected, after the overnight adversity to risk dissipated in FX. However, the US stock markets closed flat and the gold/oil spread advanced. The Swiss franc and yen led the upmove, so their crosses came under the limelight. The US economic data didn’t have much impact.

The short-term outlook is sideways to slightly bullish for the European and commodity currencies, while the short-term outlook for the yen is sideways with downside risk. The medium-term outlook is sideways for most of the European and commodity currencies. My model is short on the Dow Jones CME FX$INDEX and on all the European and commodity currencies except for the Swiss franc, and long yen.

This analysis is based on my books, as follows:

“Trading in the Global Currency Markets” - Prentice Hall Press, 3rd edition 2007
“Technical Analysis Applications” - McGraw-Hill, 2004


Overnight:    

  • US: The New York Fed’s general business conditions index rose to 7.1 in August from 5.1 in July.
  • US: Overseas investors sold a net $6.7 billion of U.S. securities in June, including short-term instruments such as Treasury bills. They were net buyers of $17.1 billion in May. Net long-term capital inflows, however, rose to $44.4 billion in June from a $35.3 billion inflow in May. Foreign purchases of US Treasury debt rose by about $18.3 billion, though top Treasury holder China cut its stash for a second straight month. Agency debt purchases fell by $9.2 billion, while overseas investors were net sellers of U.S. corporate debt for a second straight month.     
  • US: The National Association of Home Builders/Wells Fargo Housing Market Index fell by one point to 13, its worst reading since March 2009.   
  • Canada: No data        

Chart

Chart

Today’s economic calendar:   

  • Australia: No data
  • Japan: No data  

EUR- March

Luca Model: Short since August 9

Chart 

The September euro reversed from a nearly four-week low to close up on Monday. However, it failed to close above the 55-day moving average. The short-term outlook is sideways to slightly bullish. The medium-term outlook is sideways and my model is short. The long-term outlook remains bearish. 

Good resistance is at 1.2833 from the 55-day moving average. Above 1.2893, the 21-day moving average resists at 1.2946. 

Initial support is at 1.2743. The next floor is 1.2650 from the Ichimoku cloud. Below 1.2570, distant support lies at 1.2435.


INDICATORS
 
Fast stochastics: Bearish 
MACD: Slightly bearish 
Ichimoku: Bullish


OUTLOOK

NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Sideways
LONG-TERM: Bearish

JPY - March

Luca Model: Long since July 29

Chart      
 
The oversold September Japanese yen recovered the losses incurred on Thursday and Friday. The recovery was underpinned by some Japanese officials’ verbal intervention, but has probably ended. The short-term outlook is now sideways and the risk is on the downside. The medium-term outlook is slightly bullish and my model is long. 

Immediate support is at 116.70. The 21-day moving average supports at 115.77. Distant support is at 114.92. 

Initial resistance is at 117.39. The high of the uptrend is 118.05. 


INDICATORS
 
Fast stochastics: Sideways
MACD: Sideways
Ichimoku: Bullish


OUTLOOK

NEAR-TERM: Sideways
MEDIUM-TERM: Slightly bullish
LONG-TERM: Sideways

GBP - March

Luca Model: Short since August 10

Chart   


The September pound reversed from a near three-week low, crawled back into its rising channel and closed above the 21-day moving average. The short-term is sideways to slightly bullish. The medium-term outlook is sideways and my model is short. 

Immediate resistance is at 1.5711. The next cap is 1.5764. Distant resistance is perched at 1.5852.

The 21-day moving average supports at 1.5609. Monday’s low is 1.5531. Distant support is at 1.5460. 


INDICATORS
 
Fast stochastics: Bearish (oversold)
MACD: Sideways
Ichimoku: Bullish


OUTLOOK

NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Sideways
LONG-TERM: Bearish

CHF - March

Luca Model: Long since August 16 (reversing short since August 9)

Chart 


The September Swiss franc found support from the 21-day moving average and exploded out of an inside range to challenge the top of its uptrend. Reasons? Adversity to risk and natural sales of EUR/CHF. The short-term outlook is sideways to slightly bullish. The medium-term outlook is sideways and my model reversed its short position.

The top of the uptrend is .9683. Further resistance is at .9722 and .9779.

Initial support is at .9579. The 21-day moving average follows at .9516. Below 9444, a pivot low is at .9402.  


INDICATORS

Fast stochastics: Bullish (overbought)
MACD: Bearish 
Ichimoku: Bullish


OUTLOOK

NEAR-TERM: Slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Sideways

CAD – March

Luca Model: Short since August 6

Chart 


The oversold September Canadian dollar closed with only nominal losses on Monday. The short-term outlook is sideways with upside risk. The medium-term outlook is sideways and my model is short.
 
The 21-day moving average resists at .9647. The next cap is .9735.     

The 200-day moving average supports at .9534. A rising trendline follows at .9503. There is additional support at .9439 and .9360.


INDICATORS
 
Fast stochastics: Slightly bearish 
MACD: Slightly bearish
Ichimoku: Bullish
 

OUTLOOK

NEAR-TERM: Sideways    
MEDIUM-TERM: Sideways
LONG-TERM: Sideways

AUD – March

Luca Model: Short since August 10

Chart 


The overbought September Australian dollar aggressively reversed from a near four-week low and closed just above the 21-day moving average. The short-term outlook is sideways to slightly bullish. The medium-term outlook is sideways and my model is short. 

Initial resistance is at .8963. Above .9010, further resistance is at .9046.   

Immediate support is at .8904. Monday’s low is .8830. The 55-day moving average is at .8803 and the 100-day moving average at .8761. 


INDICATORS
  
Fast stochastics: Sideways
MACD: Slightly bearish
Ichimoku: Bullish


OUTLOOK

NEAR-TERM: Sideways to slightly bullish 
MEDIUM-TERM: Sideways to slightly bullish
LONG-TERM: Sideways